On November 2, 2016 CombiMatrix Corporation (NASDAQ:CBMX), a family health molecular diagnostics company specializing in DNA-based reproductive health and pediatric testing services, reported financial results for the three and nine months ended September 30, 2016, and provided a business update (Press release, CombiMatrix, NOV 2, 2016, View Source [SID1234516186]).
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"Excellent execution on our business initiatives keeps us squarely on the path to profitability," said Mark McDonough, CombiMatrix President and CEO. "Among quarterly financial highlights, we are reporting revenue growth of 29%, our third consecutive quarter of gross margin above 50% and record cash reimbursement of $3.1 million, or 95% of total revenues. Combined with our ability to manage expenses, we reduced both our operating loss and our cash burn by nearly half from one year ago.
"We are pleased with our recent performance and expect continued growth in revenue and test volume, along with consistent cash reimbursement and prudent expense management in the coming year with a focus on creating value for our shareholders," Mr. McDonough added. "Given our outlook, we are increasingly confident we will reach our goal of positive cash flow from operations by the fourth quarter of 2017."
Third Quarter Financial and Operating Highlights (all comparisons are with the third quarter of 2015)
Total revenues of $3.2 million, up 29%
Total test volume of 2,835, up 14%
Reproductive health revenues of $2.3 million, up 39%
Reproductive health test volume of 1,483, up 17%
Gross margin of 54.0%, up from 43.6%
Number of billable customers of 257, up 10%
Cash collections at new record of $3.1 million, or 95% of total revenue, up 29%
Volumes Revenues (in 000’s)
Q3 ’16 Q3 ’15 # Δ % Δ Q3 ’16 Q3 ’15 $ Δ % Δ
Prenatal 294 272 22 8 % $ 408 $ 368 $ 40 11 %
Miscarriage analysis 990 866 124 14 % 1,622 1,145 477 42 %
PGS 199 127 72 57 % 286 149 137 92 %
Subtotal – reproductive health 1,483 1,265 218 17 % 2,316 1,662 654 39 %
Pediatric 505 509 (4 ) (1 %) 589 558 31 6 %
Subtotal 1,988 1,774 214 12 % 2,905 2,220 685 31 %
FISH and karyotyping 847 721 126 17 % 306 261 45 17 %
Total – all tests 2,835 2,495 340 14 % 3,211 2,481 730 29 %
Royalties 37 45 (8 ) (18 %)
Total revenues $ 3,248 $ 2,526 $ 722 29 %
Volumes Revenues (in 000’s)
9 Mo’s. ’16 9 Mo’s. ’15 # Δ % Δ 9 Mo’s. ’16 9 Mo’s. ’15 $ Δ % Δ
Prenatal 860 936 (76 ) (8 %) $ 1,203 $ 1,214 $ (11 ) (1 %)
Miscarriage analysis 2,886 2,664 222 8 % 4,701 3,467 1,234 36 %
PGS 566 157 409 261 % 759 189 570 302 %
Subtotal – reproductive health 4,312 3,757 555 15 % 6,663 4,870 1,793 37 %
Pediatric 1,454 1,557 (103 ) (7 %) 1,646 1,687 (41 ) (2 %)
Subtotal 5,766 5,314 452 9 % 8,309 6,557 1,752 27 %
FISH and karyotyping 2,497 2,125 372 18 % 881 735 146 20 %
Total – all tests 8,263 7,439 824 11 % 9,190 7,292 1,898 26 %
Royalties 137 112 25 22 %
Total revenues $ 9,327 $ 7,404 $ 1,923 26 %
Financial Results
Three Months Ended September 30, 2016 and 2015
Total revenues for the third quarter of 2016 increased 29% to $3.2 million from $2.5 million for the third quarter of 2015. Reproductive health diagnostic test revenue, which includes prenatal microarrays, miscarriage analysis and preimplantation genetic screening (PGS), increased 39% to $2.3 million and testing volume increased 17% to 1,483. The third quarter 2016 revenue increase was driven primarily by higher test volume for reproductive health diagnostics, higher average revenue per test particularly for miscarriage analysis and PGS tests, and from an increase in the number of billable customers, which reached 257 during the third quarter of 2016 compared to 234 in the prior-year period.
Total operating expenses were $4.1 million for the third quarter of 2016 compared with $4.2 for the prior-year period. The decrease was due primarily to lower sales and marketing and research and development expenses, partially offset by higher general and administrative expenses due to higher personnel, investor relations and consulting costs and higher cost of services as a result of higher test volume. Gross margin for the third quarter of 2016 improved to 54.0% from 43.6% for third quarter of 2015.
The net loss attributable to common stockholders for the third quarter of 2016 was $856,000, or $0.38 per share, compared with a net loss attributable to common stockholders for the third quarter of 2015 of $1.7 million, or $2.00 per share, an improvement of $831,000.
Nine Months Ended September 30, 2016 and 2015
Total revenues for the first nine months of 2016 increased 26% to $9.3 million from $7.4 million for the first nine months of 2015. Revenues for the first nine months of 2016 included $9.2 million in diagnostic services revenue and $137,000 in royalty revenues.
Operating expenses for the first nine months of 2016 were $12.9 million compared with $12.4 million for the prior-year period, with the increase mainly due to higher general and administrative expenses and higher cost of services resulting from increased testing volumes, partially offset by lower sales and marketing expenses. Gross margin improved to 52.9% for the first nine months of 2016 from 44.8% for the first nine months of 2015.
The net loss attributable to common stockholders for the first nine months of 2016 was $5.2 million, or $3.48 per share, compared to $6.0 million, or $7.21 per share in 2015. The net loss attributable to common stockholders in 2016 reflected one-time, non-cash charges of $1.9 million related to deemed dividends from the issuance of Series F convertible preferred stock and warrants in the $8.0 million public offering that closed on March 24, 2016. This increase was partially offset by the reversal of the $890,000 Series E deemed dividend recognized in 2015 from the repurchase of those securities upon closing of our Series F public offering, partially reduced by the $656,000 deemed dividend paid to the Series E investors in February of 2016.
The Company reported $4.3 million in cash, cash equivalents and short-term investments as of September 30, 2016, compared with $3.9 million as of December 31, 2015. The Company used $813,000 and $3.4 million in cash to fund operating activities during the quarter and nine months ended September 30, 2016, respectively, compared with $1.5 million and $4.2 million used to fund operating activities during the comparable 2015 periods, respectively. The significant decreases in net cash used to fund operating activities for the 2016 periods resulted primarily from improved cash reimbursement of $3.1 million and $8.5 million for the three and nine months ended September 30, 2016, respectively, compared with $2.4 million and $7.0 million for the three and nine months ended September 30, 2015, respectively.